Program will push expansion into uncovered, unprofitable regions, but is it worth the big sticker?

At a time when the federal government's spending is being increasingly scrutinized, the U.S. Federal Communications Commission has announced a new plan to pour almost a third of a billion dollars into the telecom industry. The handouts will be delivered to U.S. telecommunications firms which bring 3G service within 2 years or 4G service within 3 years to underserved/uncovered regions.

The fund's targeted regions included large swatches of land in the American Rockies, including large parts of Idaho, Nevada and Washington state. Alaska is another target for wireless expansion. Under the FCC rules carriers will "bid" on the grant contracts in a reverse auction. The contract will be rewarded to the carrier who agrees to provide the lowest cost service to customers if multiple carriers submit proposals for a region.

Bidding will run from June 27 to July 11, with the FCC announcing winners at the end of the $300M USD in targeted Phase I funding grants. Winners must provide service to 75 percent road miles in the "census tract" for the region.

Just because the new plan doesn't create new government spending doesn't mean that its big sticker price won't provoke controversy and debate. Some question whether the government should use taxpayers money while "playing wireless Santa Claus".

The new FCC Mobility Fund will reallocate existing dollars to pay for mobile network expansion in neglected areas such as the picturesque highways of Alaska. [Image Source: Planetware]

FCC Chairman Julius Genachowski counters such criticisms, stating, "For too many, dead zones in mobile coverage are too common, and today's action will help close those gaps. By using market-based mechanisms, we'll ensure more gaps in mobile coverage are closed, and that every dollar is spent wisely and efficiently."

Under the plan, $500M USD will be provided each year in coming years to boost deployment and service speeds. The FCC has also promised $50M USD to provide low-cost wireless services to Native American reservations.